[Click eStock] "KB Financial, Prudential Acquisition Has Little Impact on Stock Price"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment on the 13th forecasted that KB Financial's acquisition of Prudential Life would have a minimal impact on the stock price as the increase in group profits relative to the investment amount is insignificant. Accordingly, they maintained the investment opinion 'Buy' and the target price of 48,000 won as before.

Choi Jungwook, a researcher at Hana Financial Investment, stated, "KB Financial recently decided to acquire 100% of Prudential Life shares for 2.34 trillion won," adding, "The acquisition price is about 0.8 times the book value of Prudential Life, so this acquisition is expected to have both positive and negative effects, and the market reaction is unlikely to be heated."

Researcher Choi evaluated, "There will be a bargain purchase gain of about 200 billion won, which is expected to be recognized at about 40 billion won each quarter from the fourth quarter to the fourth quarter of next year," and "Among the non-bank portfolios, the life insurance business was the most vulnerable, but with market share expansion and an annual group profit increase of around 100 billion won without a paid-in capital increase, ROE is expected to rise slightly."

However, due to the spread of COVID-19 and concerns about economic recession, the importance of capital has become higher than ever, and considering financing costs, the increase in group profits is analyzed to be limited to about 100 billion won annually.

Researcher Choi stated, "Looking at the acquisition price, the attractiveness in terms of price is not high, so the impact of the Prudential Life acquisition on KB Financial's stock price is expected to be limited."

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